The Seattle Condo Blog | Seattle Condos and Lofts

Seattle’s January citywide $291,500 median condo price reflected a decrease of 7.17% compared to the same period last year, but improved 16.1% over December. However, last January’s median price of $314,000 was the peak over a 24-month period…for the most part median prices hovered between $275,000 and $300,000.

As expected, sales activity picked up with pendings increasing 42.2% to 175 transactions over the prior month (and a 5-month high). Though, that was still 6.9% fewer than last January. And, for the next few months we will not match 2010′s unit sales volume; the April 30th tax credit deadline generated a huge surge last year. Without the external boost this year, we’ll see steep declines in pendings throughout Spring, compared to 2010.

The 113 closed condo sales in January reflected a year-over-year decline of 9.6% and a 5.8% dip from December. Like pendings, the next 4-5 months will exhibit fewer closed sales compared to last year.

The number of condos listed for sale last month increased 5.1% above December to 1,041 units, which was expected, though it was far less than last Janary. Active condo listings will continue to rise from this point on and will peak during Summer.

The Seattle condo inventory supply rate dipped to 5.9 months based on pendings and rose to 9.2 months based on closed sales. Either method continues to suggest a buyers market environment.

Going forward, Seattle’s condo market faces challenges, especially through the first half of the year. The lack of artificial stimulus and an increasing foreclosure rate will place greater pressure on sellers to adjust to the ever changing market place. On the other hand, lower prices, perceived value and sustained mortgage interest rates may open the door for more future homeowners. I do think we’ll see plateauing of both median prices and unit sales activity, though at a lower threshold than last year.

© The Seattle Condo Blog

Contrary to conventional wisdom Seattle’s annualized citywide median condo value rose in 2010 to $285,000. That’s up a respectable 2.2% over 2009. The average condo price also increased 1.2% above 2009 to $364,035.

The number of units sold in 2010 was 1,783, just 10 fewer than in 2009. Given the nominal difference in units sold and the increase in citywide value, I don’t think I’m going out on a limb stating that the Seattle condo market reflected stability in 2010. With that said, results varied widely depending on location, condition, age and price points. A number of areas saw declining values and reduced sales.

Neighborhoods that realized the greatest increases were Alki, Fauntleroy, Leschi and Wallingford. Leschi was the only neighborhood that experienced increased median prices over the past three years. On the flip side, more neighborhoods saw median condo values drop rather than increase. The biggest declines were reflected in downtown Seattle, Maple Leaf, North Beacon Hill and Madison Park. Also turning in noticeable drops were Belltown, Magnolia, the University District and the Admiral/Junction area of West Seattle.

While hindsight and statistics suggest the Seattle condo market stabilized this past year, the outlook may be a bit more challenging going forward. Notably, unlike 2009 and 2010 there aren’t any tax credits to spur sales activity this year. The lingering effects of the 2007 market crash, the struggling economy and liens/lawsuits have affected numerous condominiums, making them essentially unavailable to most buyers as a result of stricter mortgage guidelines and weary lenders. For instance, many lenders have backed off financing mortgages on buildings with high HOA default rates, underfunded reserves or with too many rental units, an effect of loan defaults and foreclosures.

But, not all is gloom. In 2010 more condos at higher price points sold compared to 2009. For example, sales of units priced under $300,000 shrank 3.9% while sales of condos priced $500,000 and above increased 17.8% last year. The $1 million plus level was even more striking with sales up 29.5% compared to 2009. So, there are well-qualified buyers who are eager to purchase and/or see value in a Seattle condo. We’re also likely to see more purchases by foreign investors. Mortgage interest rates continue to linger at historic low levels making borrowing relatively inexpensive. However, rates are expected to rise, which may either deter or incent buyers to act as their buying power diminishes.

See notes below chart for more information on these figures.

Notes:

Alki’s 157.6% increase in median price was more of a return to normal in 2010 rather than a massive surge in value. In 2009, 50% of the condo sales in Alki were at Lighthouse Point where most units were priced under $200,000, drastically reducing the median value. In 2010, only 7% of the sales in Alki were at Lighthouse Point. Likewise, in Fauntleroy, Leschi and Wallingford, better quality, higher-priced condos sold in 2010 vs 2009. The opposite occurred in Maple Leaf, with more lower valued condo sales in 2010 than 2009.

For Downtown Seattle, I included the auction sales at 5th & Madison and Olive 8 to determine the 2010 median condo price. That, plus the 141% increase in unit sales downtown, mostly lower priced condos, contributed to shifting the median point downward. Therefore, it’s important to note that downtown condos did not lose 40.7% of their value, but rather a greater number of value-priced condo sales lowered the mid-point.

Last year, I had grouped the Downtown Seattle, Pioneer Square, the International District and Denny Triangle neighborhoods together. Because those areas are fairly distinct with vastly different styles of condos, for 2010 I’ve separated them out.

I placed sales at The 2200 and Enso into the new South Lake Union neighborhood category along with Marselle and Veer Lofts.

Adjusted 2009 median prices for Belltown, Capitol Hill and Queen Anne to contemplate sales from condo auctions.

In calculating the median price figures I manually scrubbed through the NWMLS database as many condo neighborhoods were misclassified and added auction sales, therefore my calculations may differ from the NWMLS. It should also be noted the NWMLS database is not inclusive. Properties sold at auction, through private sales (by owner) or unlisted new construction units were not included in the NWMLS database.

© The Seattle Condo Blog

December is the slowest month of the year in the real estate cycle, so we’d expect figures to be depressed and last month’s Seattle condo market stats didn’t disappoint.

The citywide Seattle median condo price dipped 3.46% to $251,000 compared to December of last year. West Seattle was the only market area that showed an improvement, though only slightly with just a 0.5% increase in median value. Northwest Seattle (north of ship canal, west of I-5) showed the largest one-year decline, down 16.4%.

Pending transactions (properties under contract) dropped 17.5% while closings dipped 13.7%, compared to the same period last year. Yet all was not gloomy…the number of closings increased 22.4% between November and December.

The number of active listings fell 1.8% to 990 units, the fewest number of available condo units for sale since February 2007. Seasonal fluctuation, increase in rentals, sellers holding out for a turnaround and the rise in foreclosures likely account for the drop in listings.

The Seattle condo inventory supply rate remained unchanged based on the number of pending transactions, but reduced 4 months to 8.3 months of supply based on closed units. Both methods reach the same conclusion, however, that Seattle remains a buyer’s market overall. Though, conditions will vary by neighborhood and price level.

While Seattle’s condo market will continue to struggle for some time to come, 2011 portends to be a more active market than this past year. Mortgage interest rates remain at historically low levels, but are expected to rise, which will may persuade buyers off the fence. New construction inventory will constrict as existing developments continue to sell off their remaining units along with the possibility of more condo auctions.

Coming out of a fairly disastrous October, November’s Seattle condo market stats look a little better. The citywide Seattle median condo price was $263,500, an improvement over October by 5.4%, yet down 3.13% compared last November.

The number of closed sales in November dropped rather significantly to just 98 units throughout Seattle. That’s a 49.2% year-over-year drop and and a 21% dip from the prior month. Though, November 2009 closings were artificially high due to the October 31st tax credit contract deadline last year.

On the other hand, the number of pending transactions (condos going under contract) remained stable…151 pending sales compared to 153 last November. That also reflected a one-month improvement of 11.9% in Seattle condo sales. Hopefully, we can carry that momentum to finish out the year.

As seasonally expected, the number of active listings dipped to 1,197 units and will continue to decline until January.

The increase in sales last month, combined with the reduced number of listings, resulted in a more favorable inventory supply rate of 7.9 months, based on pending transactions. However, calculated with closed units, the Seattle condo inventory supply rate jumped to 12.2 months. Two very different numbers, though I’m more inclined to agree with the closed unit method. However, this is a citywide rate and actual market conditions will vary by neighborhood.

We should expect a slight dip in values with reduced inventory and fewer sales and closings to round out 2010.

Not too surprisingly, Seattle’s median condo price dropped last month to $250,000, a 16.67% year-over-year decline and a 15.3% dip from September. There was a bump in last October’s median price brought about by a rash of sales in order to meet the November tax credit deadline. That, combined with lingering buyer apprehension, resulted in a poor condo market performance last month.

The number of Pending and Closed Sales transactions took another hit in October. Compared to the same period last year, Pendings and Closed Sales they were down 50.4% and 32.6%, respectively. Again, a factor was the November 2009 tax credit deadline, though uncertainty about the economy contributed to buyers weariness.

The number of active condo listings declined to 1,349 units in October, a 5.7% decline from September and just 0.9% more than last October. The reduction is mostly attributable to the cyclical end of the year slowdown.

Although, active listings reduced, the citywide Seattle condo inventory supply remained high with a 10-month supply rate. That is, if no new listings come on the market, it will take 10 months to exhaust the supply at the current sales velocity. This represents a firm buyers market environment, overall. Though, market conditions will vary by neighborhood (location) and price point. When factoring in unlisted developer units (e.g. Olive 8, Escala, Enso) and shadow inventory, the true supply rate is much higher…more than 14-months.

It’ll be a long winter for the Seattle condo market, which will have a way to go before turning around. Not pleasant news for condo owners and sellers, but it could be an opportunity for qualified buyers given the abundant inventory, volatile prices and continued low-interest rates. Condos aren’t for everyone so be sure to discuss the benefits, disadvantages and risks of condo-ownership with your agent.

I added a new graph per readers suggestion, comparing the median and average citywide sold prices, though average is not a great metric; a single transaction such as the $5.9 million sale at Escala in July and the $7.2 million sale at the Four Seasons in October skewed the average sales price. Excluding the $7.2 million sale in October reduces the average sales price from from $403,182 to $347,939. Condo sales have been relatively consistent with 60-64% of sales priced under $350,000.






Breakdown of Seattle October 2010 sold condo units:

Source: NWMLS. Though some figures were compiled independently and were not published by the NWMLS.

September’s NWMLS figures were a mixed bag for Seattle’s condo market. Overall, market values held their own, though sales plummeted.

Seattle’s citywide median condo price remained unchanged from August at $297,000. However, that was a significant one year increase of 14.56% over last September. That last time we experienced a double-digit year-over-year median price increase was back in October 2007, just when the market started to crash. Keep in mind, results varies by neighborhood and price points. With the exception of the Downtown/Belltown and Capitol Hill areas, every neighborhood realized declining values.

As we head into Fall the number of active listings will diminish, which we saw in September with a one-month reduction of 4.1%. Compared to last year, however, there were 5.8% more listings. Listed short sales and bank-owned properties (REO) accounted for 1 in every 5 condo units for sale.

The most striking stat was the huge drop in the number of sales (pending transactions), down 40.2% from last September and a 19.8% one-month decline from August. The number of closed transactions dipped as well…down 23.8% year-over-year and 7.7% month-over-month.

However, that was to be expected to some degree. Condo sales last autumn were spurred by the original November 2009 tax credit deadline, which generated a rush of sales in September and October of last year.

The higher number of sales last year kept the inventory supply rate low as well. Without the tax credit incentive this year, along with economic uncertainly and buyer weariness, the inventory supply rate rose to 9.5 months, even though the number of listings have been declining since June. As a result, Seattle remains ensconced in a buyers market.

Going forward, expect condo sales to slow its pace further, though I think we should see values hold their own (citywide median).

The August condo market results from the Northwest Multiple Listing Service were pleasantly surprising with the median Seattle condo value rising to $297,000; a year-over-year increase of 5.97% and a one-month increase of 2.4% over July.

The number of available properties declined 3.9% from July to 1,492 units, though that was still 6.9% more than August of last year. So, there’s still a good number of properties available.

Pending transaction stats have been improving over the past several months with August’s year-over-year pending activity down just 6%, which is great when compared to the -40.8% in May, -30% in June and -20.3% in July (YOY). Further, the number of pending transactions increased 10.6% over July.

However, that trend won’t continue. For the remainder of the year, expect to see the year-over-year figures for pendings to come in well below last year’s activity level, which reflected increased sales volume resulting from rush to meet the November 2009 tax credit deadline.

The number of closed sales dropped 10% compared to last August and was down 2% from July’s closings. Like pendings, there will be fewer closed sales going forward compared to last Fall.

The inventory supply rate dropped to 8 months based on pending, which is good, yet remained at over 10 months based on closed sales. This means we’re still in a relatively stable buyers market, which we’re likely to continue in for the foreseeable future.

I had been expecting the market to reverse the gains made during the Spring as a result of the first-time and repeat buyer tax credits. True, condo sales did slow considerably in June and to a lesser extent in July, but median price values have been remarkably stable this year.

The citywide median condo price in July checked in at $290,000. That’s a one-month improvement of 1.8% over June and a fairly impressive 7.4% increase over the same period last year. So far this year, 5 of 7 months have shown a year-over-year increase in the citywide median price. And, we’re no longer seeing the wide swings that occurred during the more volatile market place over the past two or so years. That said, though, the results will fluctuate by neighborhood.

The number of active listings actually dipped in July to 1,554 properties…10 units fewer than June. Though, that’s still 10.1% (143 units) more than last July. Inventory levels tends to peak around August, so hopefully we’re seeing the worst of it now.

The inventory supply rate, based on pendings, decreased ever so slightly to 9.2 months of supply, which is still a pretty solid buyers market.

The number of pendings rose 4.9% over June to 169 units, but that was a 20.2% dip from July 2009. The number of closed sales dropped more substantially, down 31.3% from June and 20.8% from July of last year.

Going forward, the market will likely fare better than I’ve been prognosticating as it corrects itself. Although I still remain a bit cautious in my assessment as we haven’t hit bottom yet, I think we’ll continue to see fairly stable citywide condo values over the next few months. Interest rates are expected to remain low, which will help keep the wheels churning. However, we’ll experience slower sales activity as we wind up the year since the 2nd half of 2009 was artificially propped up by the rush to meet the original tax credit deadline last Fall. So, fewer sales but more stable values.

The May 2010 Seattle condo market figures showed just how significant the home buyer tax credits were. The most indicative statistic was the number of pending transactions last month. In May, there were 154 transactions that went under contract while a month before there were 365 pending condo transactions rushing to meet the April 30th tax credit deadline. That’s a one-month drop of 57.8%. Compared to last May, pendings were down 40.8%.

The number of closed sales increased as expected, up 39.8% above the same period last year and 8.2% over April. Though, considering how many pendings there were in April, the 197 closings in May was lower than anticipated. That might have been affected by short sale transactions, which takes longer to close and have a higher failure rate.

Compared to last May, Seattle’s median condo price dipped 6.25% to $285,000, reversing an 3-month year-over-year appreciation trend. However, the median price has been stable, essentially plateauing over the past 4 months.

Inventory continued to rise with 1,548 active listings in May, which reflected a 1.7% increase over April and a 12.3% increase compared to the same period last year. That rise, combined with the drop in pending transactions, resulted in a massive jump in the inventory supply rate to 10.1 months. Add in the unlisted new construction units and we’re closer to 14 months of inventory.

As the graph below shows the inventory rate is quite volatile, though, it’s likely to remain in the seller market range through summer. Inventory is now up to 2008 levels, which may result in further price fluidity and help sustain an active marketplace as buyers have more choices.

As there are two schools of thought on calculating the inventory supply rate – either using the pending transactions or closed sales methods – I’ve updated the graph to include both. The inventory supply rate is calculated by dividing the number of active listings by the number of pendings or closed units. I use the pending transactions method which shows a significant increase. On the other hand, the closed sales method indicates a plateauing trend.

Source: NWMLS. Though some figures were compiled independently and were not published by the NWMLS.

All around, April 2010 was a very good month for Seattle’s condo market. The results were rather phenomenal considering how the local market has fared over the past few years. The year-over-year Seattle condo median price rose 2.6% to $275,000, not a lot, but that was the third consecutive increase in median price, which hasn’t occurred since 2007.

The one month median price did fall 5.5% from March, though going back to 2006, April’s median price has always been lower than March’s, so I’m calling that cyclical.

The number of condos going under contract (pending transactions) increased 65.2% over last April while closed sales jumped 80.2%.

The number of active condo listings continued to rise, up another 11.8% last month to 1,522 units listed in the NWMLS. Fortunately, for now, the strong sales velocity has kept the inventory supply relatively low. The supply rate was down to 4.2 months citywide in April, though in several areas (downtown and North Seattle), the rate dipped into the 3′s…nearly seller market conditions.

Though, much of the increased sales volume over the past few months have been attributable to the federal home buyer tax credits. With the credits having expired on April 30th, combined with rising inventory, we’ll see a shift back to a buyers market.

The rising inventory level is a little alarming. The number of active listings peaked at 1,662 units in May 2008 and the market is presently trending in that direction. Though, whether that’s good or not-so-good news probably depends on whether you’re a seller or a buyer. As a seller, it may portend increased competition and further price volatility; as a buyer it’ll mean more choices and potentially better values. And, many believe the end of the tax credits will force prices downwards. On one hand, that’ll help incentivize further sales, thus absorbing inventory and stabilizing the market. On the other hand, it’ll be on the backs of sellers who, if they had purchased in the past 2-3 years, are likely selling at a loss.

Going forward, we’ll see another month of strong closed sales figures in May due to the lag between when units goes under contract and closing. I’m going to guess over 200 closed sales for May. Pending transactions will drop steeply. There were 365 pending transactions in April, the most in a single month since July 2007, the month before the condo market crashed. We’re not likely to see that volume again for some time to come.

One interesting tidbit is that upper-end condos are moving. Last April, only 7 condos sold were priced over $500,000, this April there were 23. As a percentage of total condo sales, $500,000+ units accounted for 6.9% in April 2009 and 12.6% in April 2010. As Seattle’s excess inventory is primarily in the $500,000+ range, it’s a great sign that they’re selling.

Source: NWMLS. Though some figures were compiled independently and were not published by the NWMLS.